Motorola building new Indian plant to counter Nokia

AP , NEW DELHI

Motorola India chairman Firdose Vandrevala, center, lights a lamp during a press conference to announce the company's plan to invest in a handset and telecom equipment plant in Madras, India, on Wednesday. Others in the photo are from left, Motorola chief technology officer Padmasree Warrior, executive vice president Stu Reed and Indian Minister for Information Technology Dayanidhi Maran.

PHOTO: AP

Motorola Inc will invest US$100 million to build a handset and telecommunications equipment plant in India in a move aimed at countering rival Nokia Corp's dominance in the Indian market.

The US electronics maker said on Wednesday it would start work on the plant with an initial investment of US$30 million, which would be scaled up to US$100 million in phases. The plant will be built near the southern city of Madras.

The plant, which is expected to become operational next year, will make a wide range of handsets and other communications gear, a Motorola statement said.

The announcement follows plans by Nokia Corp, which is setting up a handset manufacturing plant in India, also near Madras, with an investment of US$150 million. An overwhelming majority of nearly 100 million mobile phone users in India prefer Nokia over Samsung, Motorola and Ericsson.

The latest announcement by Motorola, based in Schaumburg, Illinois, is part of the company's efforts to boost its sluggish sales in one of the world's fastest growing handset markets. India is adding 4 million new mobile phone subscribers every month.

During a visit to India last year, Motorola chief Edward Zander admitted the company had failed to seize the opportunity in India. The company has since has entered into a distribution agreement with Bharti Televentures Ltd, India's largest cellular phone service provider, and commissioned a handset manufacturer in India to assemble the C-115 handset -- Motorola's best-selling phone.

"India is a vitally important market for Motorola and as a strategic manufacturing hub offers a compelling value-proposition of best-in-class talent and strong cost efficiencies," the company statement quoted executive vice president Ron Garriques as saying.

"Our decision to make an investment of this scale is a reflection of our continued global commitment to connect the next billion customers," he said.